TY - JOUR AU - Kimball,Miles S. TI - Precautionary Saving in the Small and in the Large JF - National Bureau of Economic Research Working Paper Series VL - No. 2848 PY - 1989 Y2 - February 1989 DO - 10.3386/w2848 UR - http://www.nber.org/papers/w2848 L1 - http://www.nber.org/papers/w2848.pdf N1 - Author contact info: Miles S. Kimball Department of Economics University of Colorado 256 UCB Boulder, CO 80309 Tel: 303/492-8295 Fax: 303/492-8960 E-Mail: miles.kimball@colorado.edu AB - The theory of precautionary saving is shown in this paper to be isomorphic to the Arrow-Pratt theory of risk aversion, making possible the application of a large body of knowledge about risk aversion to precautionary saving, and more generally, to the theory of optimal choice under risk. In particular, a measure of the strength of precautionary saving motive analogous to the Arrow-Pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving, and to give a new interpretation of the Oreze-Modigliani substitution effect. ER -